They say the grass is always greener on the other side. If you are employed in a job that is not 100% fulfilling, you may look at friends who are consultants or contractors and envy their independence and freedom. Or you may be a contractor missing the security of a regular salary and paid leave. Which is the better option?
There is no right answer. The correct choice for you will depend on your career and the opportunities within it, your personal circumstances, your attitude to risk and your personality – are you calm and able to deal with the unpredictable or does uncertainty make you anxious? We are all different, and you need to consider all angles – not just the financial one – when considering the path of the independent contractor.
Be an entrepreneur, not a temp
Contracting is not a temporary solution. It is a conscious decision to change your career to a completely different employment model, that of an independent entrepreneur. It is a lifestyle choice, not just an alternative work option to get you over an obstacle such as retrenchment or an unsatisfactory employment situation.
When you’re up, you’re up
As a contractor you are your own boss. You are running your own business, even if you turn up in someone else’s office everyday. The product your business sells is your time, skill and expertise. So when it all goes right, the success is yours and yours alone, not that of a team, and can give you quite a high. Equally, you must take responsibility for things that go wrong. There is no one to blame for blunders but yourself. Do you have the resilience to learn from your mistakes and move forward, especially if the error has cost you a contract? Can you tolerate – both financially and emotionally – the loss of income that may result? If you prefer collaboration and enjoy contributing to a team effort, as well as having the support of colleagues when projects go off the rails, then you may not be suited to independent contracting.
Are you motivated?
What motivates you? Do you need the structure of a job description and clear objectives? Do you respond to the encouraging words of a boss or colleagues? Or are you a self-starter who finds motivation in achieving results? Are you able to pick yourself up after a blow? Can you perform at your best every day, even when you don’t feel like it? Permanent employees inevitably have days of minimal productivity; no one is at their peak every day. Salary is paid regardless. But expectations of contractors are higher. You are paid for results, not for attendance. Your client is paying a premium for your talent and expects you to deliver top performance whenever you are on their service.
Neither style is better than the other. We all respond to different motivators and it’s important to recognise what yours are, as you consider the factors that will ultimately determine your choice.
The legal and financial stuff
So you’ve made the decision to become a contractor. Even then, it’s not that simple. SARS has quite strict conditions that must be met to ensure a permanent employee is not disguised as a contractor. It is very important that you are correctly classified so that you – and potentially your client employer – are not hit with hefty penalties.
Historically, the preferred option among contractors was to set up a company. However, current tax legislation requires quite a few boxes to be ticked in order to go this route. An easier option is to engage the services of a contractor management company, such as Highveld, which, for a fee, will handle all the administration for you.
Whether you opt to trade as a company or a sole trader, you will need a good accountant. Attempting to handle your own books is a false economy; an accountant skilled in tax and bookkeeping for small business and the self-employed will help you take advantage of all the deductions you are entitled to and can save you money in the long run. You concentrate on meeting your clients’ technical needs and let a specialist SMME accountant take care of the other aspects of running your contracting business. Most importantly you will avoid any late tax penalties and other errors of omission.
Replacing employment benefits
As an employee you may have enjoyed access to an in-house medical aid scheme, pension or provident fund, and other benefits. It is important to replace these with private plans. When your income fluctuates, it can be daunting to commit to regular large expenditures every month; but it is critical to build them into your budget and make sure you have the cover you and your family need. Have a discussion with a financial planning adviser and thoroughly assess your savings and insurance needs. This may include income protection cover in case you are unable to work.
We can help!
Highveld and Rosstone Consulting can help you establish yourself as a professional contractor. Highveld provides end-to-end contracting and financial solutions that allow you to concentrate on marketing your specialist skills while we take care of financial, tax and labour services. We do more than ensure your compliance with tax and labour legislation, we make sure you maximise your earning potential and simplify your administrative burden. We can also give you access to a range of ancillary services tailored to the needs of contractors, such as travel, short-term insurance, wellness and more.
Rosstone Consulting has been providing expert tax and accounting services to individuals and small businesses for 25 years and can help you manage the business of your business. We also provide wealth management and financial planning services to give you expert advice on insurance and long-term savings products.
If you’d like to have a no-obligation conversation about your prospects as a contractor and your personal earning potential, contact Highveld on 012 367 5600 or firstname.lastname@example.org. We’ll give it to you straight.
Whether you are an employer considering using contractors for the first time or a seasoned veteran of contingent workforce management, how do you make sure you get the most from your highly skilled temporary professionals? One of the best ways to maximise your investment in this valuable resource is to leave the management of contractors to an expert in the field, relieving you of burdensome administration and freeing you up to do what you do best – run your successful business.
So what should you look for in a prospective (or your existing) contractor management service?
Firstly, how experienced are they? Many recruiters have moved into contractor management in recent years, but you want a company with a depth of experience, not a newcomer still finding their way in the sector. Highveld has been the employer of choice for skilled contracting professionals for more than 25 years. We know tax and labour law inside and out and will ensure you are compliant with the legislation at all times.
Secondly, do they know your industry? It’s only natural for ambitious businesses to want to expand, but let a provider from a different sector make mistakes with some other client when breaking into your industry. You want to work with an expert in your field who understands your specific labour market, the trends, technologies and shifts in supply and demand.
How well can you work together? Do your cultures align? Even if you both maintain the highest standards of quality and ethics, you may approach business in different ways. If so, the relationship may become adversarial or at least difficult. Take a bit of time to get to know each other before committing to an engagement.
Spend some time with the account management team who will be responsible for your business. If you have only spoken with the sales director or CEO so far, it’s important to meet the people who will look after you and your team on a day-to-day basis. You need to have confidence that they will understand your issues and be able to solve your problems without drama or delay.
At Highveld we don’t have a one-size-fits-all approach and we meet each client’s needs in a tailored, personalised manner.
Range of services
Familiarise yourself with the provider’s portfolio. You may only need a narrow service offering now, but what about a year from now? As your business grows or evolves, your requirements may change or expand. You may choose in future to outsource payroll management, for example. Can the service provider you are considering cope with these as yet unrecognised needs? How flexible are they? Will they amend your contract or insist on drawing up a new one?
Highveld offers contractor management services, payroll management, workforce planning, and vendor management. Do other providers give you that?
What is their technical capacity? Are their systems compatible with yours? How much of the process is automated, and how much is still manual (with the corresponding risk of human error)? What is the data security policy and does it meet your standards? Have your IT manager talk to theirs. Make sure you speak the same language.
Capacity and quality
This is a critical factor. It’s a balance because you want the reassurance of a provider with a prestigious client list and a track record of delivery to multiple and complex client demands, but you also need to know you will receive the priority and attention you deserve.
Ask to see the client list. There may be some clients who prefer not to be disclosed; that’s perfectly acceptable. You may also need your confidentiality protected at times. But if the provider is unwilling to reveal anything about their clients, this is a red flag. Ask if you can chat to one or two clients in your field. A provider with satisfied customers should be happy to provide testimonials or referrals.
And don’t stop there. Ask the clients about the quality of contractors hired through the provider. This is where the buck stops. However good the CMS provider’s systems and internal people, you are paying for the value added by the contingent professionals’ services procured through the provider. You need to be assured your provider has access to the best in the business. Highveld has a database of the best temporary staff in your field. Contractors stay on our books because of the superior service they receive from us; and you reap those benefits as the client.
Finally, what is the ratio of account manager to clients? Will you be assured of efficient service delivery or will you have to compete for the time and attention of your client service manager? With Highveld you are assured of personal service carefully designed to meet your needs.
Find out more
To find out more about how Highveld can boost your business, contact us on 012 367 5600 or email@example.com